Bitcoin Snaps Slide as Crypto Markets Dodge Push for Regulation
Bitcoin, the biggest virtual currency, sank as much as 16 percent to $5,992 on Tuesday.
(Bloomberg) -- Bitcoin rose for the first time in six days, snapping a losing streak that had helped push overall losses in digital currencies to about $500 billion, as the top U.S. market cops said they possessed all the authority needed to regulate and risk appetite returned to financial markets.
Prices steadied as Securities and Exchange Commission Chairman Jay Clayton reiterated in a Congressional hearing that he believes every initial coin offering he’s seen is a securities sale and the agency already possesses the regulatory oversight needed for enforcement.
“It was great for the space,” said John O’Rourke, chief executive officer of Riot Blockchain Inc., which invests in cryptocurrency and blockchain startups. “They don’t want to do anything to hamper the development of this technology.”
Lawmakers may still need to to pass legislation that gives agencies jurisdiction over Bitcoin’s spot market and the online platforms that digital coins trade on, Clayton and Commodity Futures Trading Commission Chairman J. Christopher Giancarlo said during the hearing.
The selloff had knocked about half a trillion dollars from digital coins since early January. That’s shaken a nascent market whose core attraction -- anonymity and decentralization -- is being challenged as never before by regulators.
Tuesday’s U.S. hearings follow comments from Bank for International Settlements General Manager Agustin Carstens that there’s a “strong case” for authorities to rein in digital currencies and that central banks -- along with finance ministries, tax offices and financial market regulators -- should police the “digital frontier.”
“Novel technology is not the same as better technology or better economics,” Carstens said in a speech in Frankfurt. He said Bitcoin may have been intended as an alternative payment system with no government involvement, yet it has become “a combination of a bubble, a Ponzi scheme and an environmental disaster,” in reference to its electricity use.
Cryptocurrencies tracked by Coinmarketcap.com have lost more than $500 billion of market value since early January as governments clamped down, credit-card issuers halted purchases and investors grew increasingly concerned that last year’s meteoric rise in digital assets was unjustified. The selloff had coincided with a rout in global equities.
For more on cryptocurrencies:
Bitcoin Crash Sees Miners Fried in This Game of Chicken: Gadfly
Bitcoin Trading Signal That Returned 1,152% Is Flashing Sell
Cryptocurrency Rules From Congress Sought by U.S. Market Cops
Bitcoin Selloff Among Biggest in Digital Coin’s History: Chart
Why Bitcoin Goes Down as Well as Up (Plus What It Is): QuickTake
Power-Hungry Crypto Mines Clean Up as Cost of Electricity Grows
--With assistance from Eric Lam
To contact the reporters on this story: Lily Katz in New York at lkatz31@bloomberg.net, Olga Kharif in Portland at okharif@bloomberg.net.
To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka
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